First of all, net income was only $419 million, or 80 cents per share compared to earnings of $797 million or $1.46 per share, in the same quarter the previous year. Analysts expected 90 cents per share. The 62% shortfall in profits shows how quickly a tech company can fall from grace.

More startlingly, BlackBerry shipments during the second quarter were way below expectations. RIMM shipped about 10.6 million units, dramatically below the forecast of 11-12 million units. The Playbook tablet shipments were an absolute disaster at about 200,000 units shipped. Playbook has been an embarrassing product launch for co-CEO Jim Balsillie who called the Playbook a "game changer" a year ago. At the time he said, "I can't think of anything more architecturally game-changing that we've done, other than the launch of the original Blackberry.”

Watsa tripled his position in the summer months ahead of RIMM’s disastrous results. As of July 1, 2011, RIMM was the fifth largest position at the company and 8% of the portfolio. The bludgeoning of RIMM shares resulted in at least $40 million of paper losses for Watsa and Fairfax Financial.

The investment community is rapidly concerned with RIMM’s cash flow. In other words, how is the company going to convert inventory into cash given that demand for the product is tepid at best?

The core problem is research and development spending. In short, the company must continue to fund billions of R&D to keep up with rivals like Google (GOOG) and Apple (Apple). However, there is hesitation that the R&D will pay off because the brand has been tarnished in recent months.

It is conceivable that the RIMM subscriber base has peaked at 70 million which means that service revenue will be a further drag on profitability in the coming year.

In a mature market, only 3 major players can survivied: iOS, Android, WinPhone

there is no room for palm, nokia, rim,

example:

car: gm, ford, chrysler

search engine: google, bing, yahoo

plane: boing, bombardier, airbus

shoes: nike, adidas, puma

tire: Michelin, goodyear, hancok

etc

I don't understand your reference here.

What about Toyota, Honda and Nissan? What about Embraer, Reebok, New Balance, Bridgestone, Toyo?

Industry dynamics aren't the same across the board, some have room for multiple players and others just a couple. RIM has fallen behind because the group is moving faster than they are and like most tech situations, the switching cost is obviously low. They don't have a moat.

Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC.
Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.